Developers Neptune, who were supposed to build The Cloud on Liverpool's waterfront, are claiming an estimated #5m from the Northwest Development Agency (NWDA) to cover the money they spent on the failed project.

That figure is on top of the #2.5m of taxpayers' money spent on predevelopment work, such as surveys and public consultation, to see if the scheme was feasible.

Liverpool Riverside Labour MP Louise Ellman described the claim as "clearly a matter of concern", adding: "We have to see the full picture before we know what is going to happen."

Cllr Joe Anderson, leader of the Labour group on Liverpool council, said: "It is obviously a worry in terms of the amount of money that may have to be paid out.

"I would also be anxious to know that any costs paid out did not come from money allocated for Liverpool. I desperately hope that would not happen."

A spokesman for the NWDA said: "We are confident that we acted at all times properly and in the interests of the public purse."